Network News

X My Profile
View More Activity

Can we control costs without Congress?

It is a sad commentary on Congress that the most promising cost control in the Affordable Care Act is the one that takes much of the responsibility for controlling costs away from Congress and hands it off to an independent board of experts. That board -- officially known as the Independent Payment Advisory Board -- has made it through to the final bill, and in substantially stronger form than I, for one, expected. The House had always been more skeptical of the idea, but then the Senate bill became everybody's bill and the energy on changing it shifted to the big-ticket items such as affordability and surviving reconciliation. The result was that a strong version of IPAB slipped through almost unnoticed.

The IPAB is a 15-person, full-time board composed of health-care experts and stakeholders. Members need to be confirmed by the Senate and will serve six-year terms, with one possible reappointment. But the important thing isn't who serves. It's how they vote. Or, as the case may be, don't vote.

If Congress approves the board's recommendations and the president signs them, they go into effect. If Congress does not vote on the board's recommendations, they still go into effect. If Congress votes against the board's recommendations but the president vetoes and Congress can't find the two-thirds necessary to overturn the veto, the recommendations go into effect. It's only if Congress votes them down and the president agrees that the recommendations die. “I believe this commission is the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve,” says Peter Orszag, who's been one of the idea's most enthusiastic supporters.

The board will propose packages of reforms that bring Medicare in line with certain spending targets. Those reforms won't increase cost sharing or taxes and they won't change eligibility or benefits. Instead, they're reforms of what Medicare pays for and how it pays for it. By 2018, the target growth rate is the average five-year increase in GDP plus one percentage point. So if GDP has been growing at 3 percent, the target is 4 percent. If Medicare's growth is faster than that, then the board is charged with saving the lesser of 1) the difference between the target growth rate and the real growth rate, or 2) 1.5 percentage points off the projected growth rate.

There are some weaknesses in the board. If Congress can find 60 votes, it can amend the board's recommendations without finding offsetting savings elsewhere. The board can't seriously change payment rates until 2018. And if Medicare is growing more slowly than the rest of the health-insurance market, then Congress can protect it from the board every other year (so it would have to save more money in, say, 2020, but not in 2021).

Nevertheless, this is the most powerful cost-cutting agency we've seen. For all those folks saying Congress can't stick to cuts, this is the closest thing to a solution that anyone's come up with. It gives Congress a way to let someone else take on the hard decisions that it doesn't have the expertise or political will to make. If Congress so chooses, it could let the IPAB do its work without ever bringing the recommendations up for a vote: They'd still go into effect, and no one would be on the record in either direction.

As a commentary on Congress, is all this a bit sad, and even weird? Yes. But it may also be necessary. And it will be interesting to see how it interacts with the private market: You could see the reforms that get seeded into Medicare being adopted by everyone else (which is common even now). And if Medicare does bring its costs far down while private insurance finds itself unable to make meaningful changes, pressure could increase for some sort of Medicare buy-in program along the lines of what Alan Grayson is proposing.

The bottom line is that IPAB creates a continuous system for controlling costs in Medicare and trying out new reforms and experiments. For all those disappointed by Congress's fecklessness when it came to cost controls in the Affordable Care Act, know that Congress actually agrees with you, and is trying to do something about it. Or at least let someone else do something about it.

By Ezra Klein  |  March 26, 2010; 2:46 PM ET
Categories:  Explaining health-care reform  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Lunch break
Next: Netanyahu's odd Iran strategy

Comments

Are there any constitutional issues here? Rulings that supersede vetoes? Seems at least close to the edge, no?

Posted by: DDAWD | March 26, 2010 2:54 PM | Report abuse

Yet you're shocked that people are opposed to this legislation. And I call BS. You knew damn well this was in the legislation. If if you didn't, shame on you for being such a cheerleader for it.

What exactly do you think this panel is going to recommend? They're going to keep new technology out and push hospice care. If you've ever been to a MedPAC meeting you'd know that.

Posted by: NoVAHockey | March 26, 2010 2:58 PM | Report abuse

Maybe I'm missing something, but this sounds like a good idea. Imperfect, but more likely to control costs that waiting for congress to do something.

This would be a good system for most government programs, as long as there was a solid limit on costs, and the boards weren't empowered to expand expenditures in addition to restricting them.

Posted by: Kevin_Willis | March 26, 2010 3:03 PM | Report abuse

This was always my favorite part of the healthcare reform package. I'm duly impressed that it made it through with little to no debate, although I guess that's because few people understood it.

But answer me this: the argument has been that this independent board would be more free from lobbying influence than Congressmen are. Is that because those on the commission don't have to run for election and thus have no need of promises of campaign donations and such? OK, but aren't lobbyists still allowed to meet, talk with and thus influence these commissioners?

Posted by: Rick00 | March 26, 2010 3:04 PM | Report abuse

@rick00: OK, but aren't lobbyists still allowed to meet, talk with and thus influence these commissioners?

Lobbyists lose their most potent club, campaign funding. They can talk a good game, but lobbyists can't apply pressure on an appointed commission with campaign cash like they can on congresscritters. That is the point of using a comission.

@ NoVAHockey-- Once an overall cap on spending is put in place, there has to be a cost benefit analysis to see what gets funded. This means prioritizing treatment options. If there is an overall cap on medicare spending, what method would you use to allocate funds?

Posted by: srw3 | March 26, 2010 3:11 PM | Report abuse

What makes anyone think that the board won't be dominated by the industry players like happened with the Federal Reserve Board?

Posted by: williamcross1 | March 26, 2010 3:18 PM | Report abuse

I'm with Kevin on this one. It seems like a good idea that we might want to apply to other parts of the government.

Posted by: nisleib | March 26, 2010 3:25 PM | Report abuse

@ srw3 I appreciate that there needs to be cost controls. I also think our elected officials, working through and with CMS, should be the ones that do it.

This just speaks to the lie that the Democrats have been pushing --- no cuts to your Medicare. Of course there are going to be cuts. They should make them, not some unelected panel that is largely unaccountable.

Posted by: NoVAHockey | March 26, 2010 3:30 PM | Report abuse

Ezra, please answer the question about consitutionality. I thought that approval of spending resides with Congress, not an independent board....

Posted by: robinshuster | March 26, 2010 3:38 PM | Report abuse

---The board will propose packages of reforms that bring Medicare in line with certain spending targets. Those reforms won't increase cost sharing or taxes and they won't change eligibility or benefits. Instead, they're reforms of what Medicare pays for and how it pays for it.---

Kind of like a big Death Panel. Cool.

---For all those folks saying Congress can't stick to cuts, this is the closest thing to a solution that anyone's come up with.---

I like the solution where Medicare is abolished, and Senators and Representatives no longer have to worry about how to bail themselves out of disasters of their own making.

Posted by: msoja | March 26, 2010 3:43 PM | Report abuse

Think 15 Maytag repairmen. I can assure you industry stakeholders haven't forgotten about this commission. They hate it even more than the public option. They got significant limitations and a 10 year reprieve and during that time they will work mightily to weaken it further. On their side: Americans simply aren't ready for an unaccountable board making cuts to Medicare.

Posted by: bmull | March 26, 2010 3:43 PM | Report abuse

@msoja: I like the solution where Medicare is abolished

PLEASE, PLEASE, PLEASE talk to the republicans about implementing this idea. Advocating the abolishing of medicare is a great move for republicans! Just do it!

Controlling costs is something that republicans support, yes? If there is a fixed amount of money that can be spent on medicare, how should that money be allocated? Are you saying that republicans are advocating no spending limits on medicare?

Posted by: srw3 | March 26, 2010 3:55 PM | Report abuse

This is my favorite part of the bill, but it's the one -- unlike all this mandate talk -- that sounds *actually* unconstitutional. (Although I haven't really looked into it, it looks sorta like INS v. Chadha --> http://en.wikipedia.org/wiki/Immigration_and_Naturalization_Service_v._Chadha )

Posted by: Chris_ | March 26, 2010 3:56 PM | Report abuse

@ NoVAHockey: I appreciate that there needs to be cost controls. I also think our elected officials, working through and with CMS, should be the ones that do it.

In a perfect world congress would do this, but here in the real world, congress whether controlled by republicans or democrats has proven repeatedly that they don't want to throw themselves on the sword of medicare cuts.

So a commission is the next best idea, unless you have something else. Leaving it to congress clearly hasn't worked.

Posted by: srw3 | March 26, 2010 4:01 PM | Report abuse

msoja - Yes! Everyone who reads this blog knows I love the Republicans and want nothing more than for them to succeed. And the only, and I mean only, way for the GOP to survive is if they come out for getting rid of Medicare.

I stongly support the GOP doing this. I think they should start today. The best way for them to go about this is by sending out a fundraising letter to all of America's retirment homes. With the old folks money they will easily be able to push their media message of Medicare repeal!

Go for it!

Posted by: nisleib | March 26, 2010 4:05 PM | Report abuse

DDAWD: I don't think so, although it's possible there could be some technicality I'm not aware of.

Whenever Congress creates a regulatory agency, (say, the EPA) their regulations have the force of law and can only be overturned by Congress if they can find the votes to explicitly pass a bill prohibiting them from doing so and that bill is not vetoed. The same thing is happening here.

Posted by: usergoogol | March 26, 2010 4:06 PM | Report abuse

"Instead, they're reforms of what Medicare pays for and how it pays for it."

So the gvmt is going to cut costs by cutting medicare payments to providers?

The Mayo clinic has just stopped accepting medicare patients at one of its clinics because it is losing too much money on medicare patients because of reduced government payments the last few years. Conservatives are blaming it on Obamacare though Mayo has been warning about this since at least 2007 and though (I believe) medicare payouts have been declining in recent years.

A local Walgreens is now refusing medicare at its pharmacy. Are all the Walgreens are doing this now? I also don't know if they are blaming it on Obamacare or not.

Also, some local doctors are posting signs that they will refuse medicare patients.

It seems there a a rebellion brewing against lowered medicare payouts.

How in the world are we going to lower costs and get care at the same time if providers refuse to accept medicare? Is this a widespread problem (this rebellion)?

Posted by: Lomillialor | March 26, 2010 4:11 PM | Report abuse

Ezra, can you clarify the differences between IPAB and MedPAC?

Posted by: jduptonma | March 26, 2010 4:22 PM | Report abuse

Gotta love msoja:

Even potentially reducing Medicare: BAD
Abolishing Medicare: GOOD

Posted by: etdean1 | March 26, 2010 4:53 PM | Report abuse

Ezra didn't mention it, but I believe the IPAD group must pass their recommendations with 3/4 of the total membership. Unless the IPAD is totally stacked (unlikely), the chances they recommend anything big seem very small - and they wouldn't be the only congressionally established regulator/advisory panel that ignores their mandate.

As to the advisibility of IPAD with strong powers, I'd be in favor if a congressional majority (50% of votes) had to override, rather than 60%). I think parts of this will be thrown out by the courts because of this supermajority requirement, and should be. As to the bigger question of unconstitutional delegation, there seems to be lots of precedent (military base closing commission!), but I'm not entirely satisfied with that either.

The congress should have the right to be irresponsible.

Posted by: JimPortlandOR | March 26, 2010 5:54 PM | Report abuse

The congress should have the right to be irresponsible.

This right has been egregiously and regularly abused, hence the need for a commission.

Insanity is doing the same thing (relying on congress to act responsibly) and expecting different results (congress actually acting responsibly, hasn't happened yet).

Posted by: srw3 | March 26, 2010 6:08 PM | Report abuse

First of all, I think the panel created under Conrad-Gregg would have been far more effective. Their mandate would have been broader and they could have considered both Medicare costs and taxes.

Lomillialor brings up a good point. How are you going to stop providers from dropping out of Medicare/Medicaid? The only way to address this is to come up with ways that will reduce the overhead enough so doctors can tread all patients and still show a reasonable profit.

Posted by: bobsteph1234 | March 26, 2010 8:04 PM | Report abuse

---PLEASE, PLEASE, PLEASE talk to the republicans about implementing this idea. Advocating the abolishing of medicare is a great move for republicans! Just do it!---

It goes to the noxious effects of creeping Socialism. Every time one of these monstrosities is enacted it creates a constituency that becomes a factor in future arguments. A whole generation is now hooked on the corrupting effect of stolen goods.

I don't give a damn for anyone with even the smallest stake in this mess. The choices are between disaster and disaster, and those who embraced the temporary gain by selling their compatriot's and children's lives down the river deserve every horrible thing that will come to them when it all falls apart.

Businesses are starting their write downs, and reassessing future health care related practices. Doctors are hanging it up. Medical device makers on the margin will go in the dumper. The bond market is struggling, and most of the bills haven't come due, yet. Not by a long shot. The Social Security Ponzi scheme is beginning to unravel, years ahead of schedule. Unsurprisingly, the housing crisis is only getting worse, but then Freddie and Fannie are still in business and working pretty much with the same model that fueled the crash. All in the recent news, with more horrors accumulating by the hour.

And the same old chiselers insist on forcing their neighbors to pay their health bills for them, while spending their days gibbering over whether an extra-Constitutional commission will figure out how to turn vinegar back into wine.

Have a nice day.

Posted by: msoja | March 26, 2010 8:11 PM | Report abuse

Committee should apply to all private insurance that elects to use it. The problem is multiple fee schedules in the market place . Why should the fee for a 70 year old be less than a 40 y.o. ? Private insurers will never have the market power or the moral authority to do this and it is one of the best ways to control health care cost/ GDP for EVERYONE.Otherwise we bill young Emily to pay for Grandpa's underpayment.

Posted by: glasnet | March 27, 2010 10:05 AM | Report abuse

Committee should apply to all private insurance that elects to use it. The problem is multiple fee schedules in the market place . Why should the fee for a 70 year old be less than a 40 y.o. ? Private insurers will never have the market power or the moral authority to do this and it is one of the best ways to control health care cost/ GDP for EVERYONE.Otherwise we bill young Emily to pay for Grandpa's underpayment.

Posted by: glasnet | March 27, 2010 10:06 AM | Report abuse

Oh, good, a death panel.

Posted by: 1100GS | March 27, 2010 12:16 PM | Report abuse

Increased use of non-elected boards and commissions by Congress could mark the beginning of necessary institutional restructuring. Haven't we been saying current political institutions are (have been) failing?

I especially like Rick00's idea that this arrangement could dilute lobbyists' influence. I'm ALL for that.

Posted by: onewing1 | March 27, 2010 2:02 PM | Report abuse

Correction: srw3's and Kevin's (not Rick00's) ideas re: lobbyists.

Posted by: onewing1 | March 27, 2010 2:07 PM | Report abuse

"...the corrupting effect of stolen goods."

This is how msoja describes a the United States of America expressing its will and providing for the general welfare of its people, through the constitutional process of decision-making by democratically elected representatives.

It is puzzling that msoja spends so much time wasting his breath at a public policy blog, since he does not believe in government, let alone public policy, or even the US Constitution.

He belongs in a far better place like Somalia or Yemen, places which have no functioning government to steal from him and crush him with their tyrannical mob rule. But apparently msoja lacks the intellectual honesty to migrate to such a place. Our favorite rural anarchist prefers to mooch off of the "stolen goods," and endlessly pontificate his boring rants about "the noxious effects of creeping Socialism."

Posted by: Patrick_M | March 27, 2010 3:54 PM | Report abuse

THIS WILL BE THE MEDICARE CLOSING COMMISSION

This is why 85 Patient Rights and Medicare Advocacy groups begged and begged Obama and the DEMS to not do this to the elderly.

---This "MEDPAC-like commission"(aka IPAB) is nothing like the current MEDPAC !!!I

The current Medpac committee-----which the DEM Congress and Obama basely claim that IPAB is modeled after------is a committee of 17 diverse health care experts-

------ more importantly----- current Medpac members are appointed by the Comptroller General of the Government Accountability Office (GAO), the independent investigative arm of Congress, thus Medpac and its appointees are truly independent.

Obama's IPAB would be 15 political appointees-----again-----political appointees, appointed by the party in power----so IPAB will be the antithesis of independence---let alone nonpartisan.

...IPAB is by design not accountable to voters---incredibly, voters are not even allowed to contact IPAB----again, IPAB will have no contact whatsoever with voters -----or seniors---

And IPAB means the congress escapes accountability to voters when inevitably the IPAB cuts to Medicare cause seniors to have reduced quality and reduced access to care.

And what if the policies generated by IPAB cause great injury and death?? ----the Congress, by their design of IPAB, may not even be able to overturn IPAB’s deadly decisions------


Decisions by IPAB can be only overturned by a super majority of 67%----the congressional vote has to be veto proof...so it takes 67 senators------ and 291 representatives (of 435 total, 256 are dems)

Any President (think Newt Gingrich) can then rewrite all Medicare policy----- can restructure all reimbursements to suppliers which is a de facto designation of benefits and treaments, no matter that it is not done directly----

----and CRUELLY, IPAB restricts changes to ONLY those that reduce the Medicare budget----- a heartless, cynical policy with the number of Medicare beneficiaries DOUBLING FROM 35 MILLION TO 70 MILLION.

IPAB----by design, will totally usurp any democratic process into Medicare's policies ever again.

Posted by: johnowl | March 27, 2010 8:45 PM | Report abuse

No, we can't trust Congress. We can't even trust other people to be judicious with use of the pooled insurance funds that we all share but if we give the money to the people, we can trust them to spend their own money wisely.

"Here in the United States," Mr. Becker says, "we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that."

Posted by: staticvars | March 27, 2010 11:05 PM | Report abuse

Ezra,

I agree with this strategy. I think it is one component to contain costs and offer comprehensive care. We have a blind spot when it comes to Health Care Reform.

http://pov9.blogspot.com/2010/02/blind-spot-of-obama-health-care-hc.html

Thanks for laying this out.

Pat

Posted by: pparris | March 29, 2010 6:00 PM | Report abuse

IPAB is an illegal board from the onset, isn't it? Correct me if I am wrong, but isn't this the same board of 15 people that Obama went to Congress and ask for the formation of and was voted out by Congress and then Obama said, 'Congress has no power over me,' and formed the board anyway? Thus, Obama formulated a board of no consequence, unauthorized, and in conflict with the Constitution of the United States.

Posted by: prossers7 | March 29, 2010 6:54 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company